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Insider Abuse In Banks



Insider dealings in commercial banks in the country have reached a level where regulators of the industry should urgently find ways of curbing the incessant fraudulent activities in the banking sector.

Already, there is a growing concern over the surge in official involvement in frauds and forgery related cases in the banking industry. The figure of insider manipulation of confidential information of bank customers has been on steady increase in recent years. According to the 2018 annual report of the National Deposit Insurance Corporation (NDIC), a total of 37,817 fraud cases were reported in 2018 against 26,182 in 2017. The amount involved stood at ₦38.93 billion in 2018 compared to ₦12.01 billion in 2017. The report indicated that the actual amount lost to fraud incidences in 2018 stood at ₦15.15 billion as against ₦2.37 billion and ₦2.40 billion in 2017 and 2016, respectively. Out of that number, a total of 899 staff were involved in frauds and forgery cases in 2018 compared with 320 in 2017.

The report further states that the number of temporary staff involved in fraud was 394, accounting for 43.83 per cent of the total number of staff involved in frauds. This was followed by Officers and Executive Assistants’ cadre with 206 or 22.91 per cent. Supervisors and Managers accounted for 119 or 13.24 per cent of the total fraud cases.

Analysts have attributed the rising fraud incidences to the increase in the sophistication of fraud- related techniques such as hacking and cybercrime as well as increase in information technology- related products and usage.

Many also attribute the disturbing scenario to the absence of job security; casualization and poor remuneration. Even more worrisome is the incompetence of senior management in many Deposit Money Banks (DMBs). These are some of the factors responsible for the rising incidences of fraud and forgery in the banking sector.

While the banks may have adopted cost cutting measures which include employing workers with lower qualifications like National Diploma (ND) as causal workers, assigning sensitive roles to such workers have exposed the banks to becoming victims of fraudulent activities. Casual workers are about 25 per cent of the banking workforce.

Added to this situation are poor corporate governance and lack of effective sanction of offenders. These factors are noted as being responsible for the high rate of staff connivance in bank- related fraud. It is also worthy of note that most of the banks with these fraudulent cases are the top banks with huge customer base and presence. The regulatory authorities are worried so also are the banking public whose deposits fall victim to this malfeasance.

It is from this perspective that this newspaper is compelled by the implication of this development to urge stakeholders in the banking sector to be vigilant, especially, in their recruitment process. Some fraudsters are said to have devised a way of influencing the hiring of their surrogates into the banks and those surrogates then pass on vital information to these kingpins through which they perpetrate these massive frauds.

These kingpins, who are big people, are able to influence the employment of their surrogates and they have penetrated everywhere. It is our candid opinion that the banks should reconsider their methods of recruitment to make sure that they don’t recruit criminal minds who are informants to even bigger criminals outside the banks. The surveillance departments of the banks also need to be very alert.

We suggest, as a way out of this ugly trend, that banks should strengthen their weak internal control mechanisms. If banks have good internal control measures, they would be alerted when there is any breach in the accounts of customers. But in fairness to bank regulators, they have, on a consistent basis, come up with pronouncements particularly in the area of electronic banking to put the DMBs on their toes often to no avail.

It is, therefore, safe to conjecture that the weakest link in any system that will cause things like fraud to occur is the human element. With this, it becomes inexorable that frauds will take place if the workers decide to make themselves willing tools in the hands of the criminally- minded.

To mitigate this flaw, it is pertinent that the banks carry out proper integrity checks on their prospective employees, especially those being recruited into sensitive positions. The increasingly ebbing moral tone in the society makes this decidedly essential.

The banks must continue, relentlessly, the enlightenment of their customers on how to stay safe with their deposits.




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